Another Water Rate Increase Proposed for San Juan Capistrano

By |July 7, 2010

San Juan Capistrano residents, who have already been hit with two water rate increases this year, were informed Monday of a public hearing on a third increase that officials say is needed because of groundwater contamination attributed to Chevron gas stations.

The City Council voted Monday to present two options to the public. One would levy an additional 74 cents per water unit used, and the other an additional 39 cents.

The surcharges are needed because of mitigation measures taken to filter part of the city’s water supply of a fuel additive known as MTBE. The additive contaminated a well near City Hall and was traced to leaks from local Chevron gas stations.

Because the well pumps water into the city’s groundwater treatment plant, city officials say the leaks caused $1.6 million in one-time charges to treat the water supply. As of June 30, the city incurred another $3.6 million in other costs related to the leak, said Assistant City Manager Cindy Russell.

The 39-cent option is projected to recover the $1.45 million annual cost to treat the MTBE, but it does not recover the $5.2 million in costs already incurred to the city by the contamination, according to a staff report. The 74-cent option is projected to recover the $5.2 million over four years and recover the annual cost.

Under the cheaper option, the average user’s monthly bill would go up $4.68, while the second option would see an average user’s bill increase by $8.88, according to a staff report.

Russell said the first option would not allow the city to hit its reserve goal, which is supposed to be enough to operate the city for 360 days. She also said that taking the cheaper option could reduce the city’s financial attractiveness to bond underwriters.

Council members expressed frustration about making residents pay for an accident that wasn’t their fault.

“I hope that Chevron comes to their senses and realizes they have tremendous liability here … and settle this before it gets worse,” said Mayor Londres Uso.

Uso also said he wants the water bill insert to state that the surcharge is a “Chevron MTBE surcharge” so that residents know who is at fault in the matter.

The public hearing on the surcharge is to be set for Sept. 17, according to a staff report.